August Durable Goods Orders Point to Slowing Trend

By September 24, 2010Economy, General

New orders for durable goods dropped in August (-1.3 percent) for the third time since April, adding to mounting evidence that manufacturing growth is slowing.  While the August decline was due mainly to a 40 percent plunge in new orders for the volatile nondefense aircraft category – and we saw gains in most other industries – a closer look shows that new orders are trending downward as manufacturing struggles to continue to lead the recovery.

In the three months ending in August, new orders for most manufactured durable goods (such as computers, machinery, primary metals, electrical equipment and motor vehicles) fell off significantly compared to the previous three months.  Even more troubling, the pace of growth for new orders for core nondefense capital goods – a bellwether for business investment – has also slowed sharply (by 77 percent) since May.

While the manufacturing slowdown in recent months stems in part from the expiration of tax credits earlier in the year, heightened uncertainty about the overall health of the recovery and the legislative and regulatory outlook is also holding back business investment.  Looking ahead, the new data point to continued bleak news on the jobs front.

Leave a Reply